Pennrose’s New Leaders on Affordable Housing Development

With mounting pressures caused by uncertain economic conditions and evolving federal policies, affordable housing developers need to find ways to address the constantly increasing low-income housing crisis, without compromising on quality.

A key player in the industry with more than half a century of development experience—Pennrose—is banking on its new leadership to deliver affordable housing solutions to supply-constrained communities. After 25 years with the company, Timothy Henkel has recently stepped into the role of CEO, while Charlie Adams, who has significantly contributed to Pennrose’s growth in the New England market, has been appointed president of development.

How do they plan to make a difference in affordable housing? We sat down with the duo to learn more about the opportunities they see in the sector and their strategy to meet only-increasing demand for low-income housing.

With increasing pressure on affordable housing availability, what’s your strategy to meet the growing demand in both urban and suburban areas?

Adams: Our main strategy is one that is meant to be durable. The idea is to meet the current housing need, but also to create a housing resource that will last well into the future.

Additionally, the affordable housing crisis is not a problem that we can build ourselves out of. We are focused on both the development of new affordable housing, along with housing preservation.

What role will innovation play in addressing the ever-increasing affordable housing crisis across the country?

Henkel: Innovation within the affordable housing industry will be critical to address housing supply challenges. Exploring new funding sources, leveraging unique partnerships and advocating for additional financial incentives or zoning reforms can be mechanisms to help increase production.

One area we are particularly interested in is exploring innovative partnerships with large local employers. For example, hospitals systems, universities and manufacturers are increasingly recognizing the need for housing resources within their communities to attract and retain employees. Local economies suffer when there is not a wide range of housing affordability, and these partnerships could deliver a ‘win-win-win’ solution for local employers, the workforce and community at large.

As you settle into the CEO role, will this be among your priorities? What will you be focusing on?

Henkel: My priorities moving into the CEO position are focused on how efficiently and effectively we can deliver upon our mission to develop high quality, transformative affordable housing.

We are strategically placing an emphasis on project execution—meaning moving projects successfully through our pipeline, from deal selection and financing to operational stability. We are also focused on expanding the size of deals, creating larger economies of scale while also delivering localized housing solutions.

Speaking of development, what’s your strategy for diversifying your pipeline?

Henkel: Strategic diversification remains a priority because it is inherent to the Pennrose mission. There is not a one-size-fits-all approach to housing—before any shovels are in the ground, we have worked extensively with residents, project partners and stakeholders to ensure each project is tailored to meet the specific needs of residents and the local community. For instance, one community may identify affordable childcare as a priority for ground-floor space, while another may prioritize a grocery chain or local small businesses.

Whether it’s veterans housing, senior housing or health-care and housing integrations, we want to focus our business efforts where there is a need. Housing should not be built in a vacuum. Executing upon a shared vision is the key to delivering sustainable community assets.

Please expand on how high-quality housing—along with supportive services—can transform communities. How difficult is it to deliver affordable housing at scale in today’s economic climate?

Henkel: Access to safe, quality, affordable housing is intrinsically linked to positive outcomes for individuals and families. However, it’s not the only piece of the puzzle. We wrap life-enhancing supportive services around housing to help enable residents to live independently and promote economic mobility. From linking residents to community agencies and services to providing onsite education workshops, we take an outcome-driven approach to help residents meet their goals.

I would be lying if I said this was easy to do. Especially in today’s climate, with rising interest rates, property values, construction costs and other affordable housing challenges, it’s increasingly difficult to pencil out projects, let alone financing the delivery and operational components of onsite supportive services. But as the adage goes, nothing worth doing is ever easy—it’s priceless to be able to take a veteran off the street and provide stable housing or provide early intervention for a young adult transitioning out of foster care.

You’ve been instrumental in expanding Pennrose’s footprint in the New England market. What lessons learned in that role do you plan to apply on a national scale?

Adams: Every single community in New England—from Meriden, Conn., to Providence, R.I., and Orleans, Mass.—has characteristics, features and cultures that make it unique and distinctive.

We are guided by delivering a shared vision. We come into each opportunity with a ‘blank piece of paper’ and work closely with residents, community partners and local stakeholders to identify what the community needs, what their vision is and how we can support their goals.

As Pennrose continues to grow and expand, my role as president of development is to continue this commitment to mission-driven housing. Success comes down to the fact that buildings are not just buildings—they are places and spaces that shape communities.

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Tell us more about the upcoming affordable housing development projects that you’re particularly excited about.

Adams: We have so many incredible projects in the works with partners across the country.

In Cincinnati, Pennrose is working closely with MidTown Cleveland Inc. to transform the historic Warner and Swasey manufacturing plant, a neighborhood landmark that has languished for more than four decades, into a vibrant community asset with mixed-income housing, amenities and retail space.

We also recently completed Nest56 at Denargo Market in partnership with TGTHR, which created 56 units of supportive housing for youth transitioning out of Denver’s foster care system or experiencing homelessness. This project is really special because it integrates trauma-informed design and the onsite delivery of tailored supportive services and amenities to provide youth with a steppingstone to a thriving, independent life.

In New York, Pennrose is working in collaboration with MPACT Collective to redevelop the former Empire State Chair Factory in Rockland County into an exciting mixed-income, mixed-use community with retail and public waterfront amenities. The team is actively engaging with the local community to crowdsource ideas and recommendations to help transform the vacant site along the Hudson River into a dynamic neighborhood that serves as a catalyst for continued downtown investment.

Another project I’m particularly excited about is the historic Veterans’ Home in Chelsea, outside of Boston. The Domiciliary Campus of the Soldiers’ Home has been in continuous operation since the Civil War, and today provides single-room occupancy for 150 veterans. Pennrose is working with the Commonwealth of Massachusetts to rehabilitate and create a new development with more than 220 units of independent, veterans’ preference affordable housing and supportive services.

How do you expect the affordable housing sector to evolve over the next few years, and what role will Pennrose play?

Henkel: The affordable housing industry, like most sectors, thrives on certainty. Developers will need to balance widespread uncertainty around federal funding and challenging economic conditions with the pressure the industry is under to alleviate the housing crisis.

At Pennrose, we are having conversations with our regional vice presidents and development team to explore scenarios for what our portfolio could look like moving forward. For example, are there specific deal types we should be prioritizing? How are changing policies and development priorities impacting requirements? How can we be less reliant on federal funds? This uncertainty is forcing us to be more strategic about portfolio diversification to ensure not every deal is contingent on the same funding avenues.

We could see a mentality or trend emerging that ‘any housing is good housing.’ If this drives the industry to be more efficient in meeting demand, that’s great, but developers also need to be careful about losing quality as a consequence. We hope to set an example for other affordable housing developers about making a meaningful impact on the housing affordability crisis, while also prioritizing long-term community investments and sustainable solutions.